Burchell v Golden Wood Pty Ltd
[2000] VSC 86
•17 March 2000
| SUPREME COURT OF VICTORIA | |
| COMMERCIAL & EQUITY DIVISION | Not Restricted |
COMMERCIAL LIST
No. 2009 of 2000
| RICHARD JAMES BURCHELL | Plaintiff |
| v | |
| GOLDEN WOOD PTY LTD (ACN 006 061 105), DATO MOHD HUSSAIN YUSUF-AL-HAJ, HAZREEK HUSSAIN YUSUF and HAZIZUL HUSSAIN YUSUF | Defendants |
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JUDGE: | Warren J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10 March 2000 | |
DATE OF JUDGMENT: | 17 March 2000 | |
CASE MAY BE CITED AS: | Burchell v Golden Wood Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 86 | |
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Order 23.01; 23.02 – application for summary dismissal – claim in contract, misleading and deceptive conduct, trust and quantum meruit – whether an agreement – whether agreement included all defendants – implied terms
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APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr W.J. Martin QC with | Sergio Guerra |
| For the First, Second and Third Defendants | Mr S.W. Kaye QC with Ms M. Loughnann | Garland Hawthorn Brahe |
HER HONOUR:
The first, second and third defendants seek summary judgment pursuant to Order 23.01, alternatively, the striking out of parts of the plaintiff's amended statement of claim pursuant to Order 23.02.
The plaintiff's claim relates to the development of land at Breamlea in Victoria called "the Golden Beach". The plaintiff alleges that he entered into an agreement with each of the defendants on 19 April 1999 whereby he was appointed as agent of the defendants to raise funds for the development known as "the Golden Beach". The plaintiff alleges that he has been excluded from a joint venture arrangement with other parties in particular, one Handbury. The plaintiff's claims lie in contract, misleading and deceptive conduct, trust and quantum meruit.
The development proposal is to develop the land at Breamlea into residential lots including a golf course. The second and third defendants are alleged to be directors and shareholders of the first defendant ("Golden Wood"). The fourth defendant is also a shareholder of the company but is not a party to the application as he is yet to be served.
The dispute between the plaintiff and the defendants arises out of the agreement called a "mandate agreement" constituted by a document dated 8 April 1999. The plaintiff alleges that the mandate agreement was between he and each of the defendants. He alleges that the agreement document was executed on 19 April 1999 when the first defendant appointed the plaintiff as agent to introduce an equity participant and joint venturer into the development. The mandate agreement is pivotal to the plaintiff's claim. The letter of 8 April 1999 was addressed to the plaintiff marked "strictly private and confidential" and provided as follows:
"Dear Sir,
MANDATE: GOLDEN WOOD PTY LTD T/A GOLDEN BEACH INTERNATIONAL RESORT JOINT‑VENTURE
We refer to our recent meetings and our subsequent discussions.
We are pleased to mandate Rick Burchell to act as agent in relation to the proposed fund‑raising exercise by way of a private placement of shares in Golden Beach International Resort Joint-Venture (1.2 Million shares @ $1.00 per share) and Bridging Finance of $2.9 Million to finance the construction of Stage 1 of the resort, on the following terms and conditions.1. Role
Rick Burchell's role will be inclusive of the following:
·Introduce large corporate parties or high networth individuals who may be interested in participating as core investors in Golden Beach International Resort JV ('GBJV'). The GBJV's equity on offer is 30% ‑ 40% amounting to an investment of $1.2 Million payable upon execution of Joint‑Venture agreement.
·Presentations to and discussions with potential investors.
·Entering into confidentiality agreements with your contacts before the release of the Confidential Information
We also agree to :
·Keep you reasonably informed of the progress of the project and any material changes to the development plans of the proposed project.
·Provide all reasonable assistance and support to both of you and your efforts to procure potential core investors in GBJV.
Target key dates are presently envisaged to be as follows:
· Offer to purchasers/investors April 1, 1999
· Offer closing June 1, 1999
· Private placement period Prior to June 1, 1999
2. Fees
Golden Wood will pay Rick Burchell for the successful introduction of an investor by way of a private placement of 100% of the equity in GBJV.
3. Promotional Expenses
Where potential investors have not confirmed interest in participating GBJV (ie. prior to execution of JV agreement) and subject to agreement by Rick Burchell and Golden Wood, promotional expenses (including production of marketing materials and travelling expenses), is to be borne by Rick Burchell.
4. Independent Experts
In structuring the private placement of GWJV's shares, any independent valuation report costs are to be borne by the purchasers.
5. Confidentiality
By accepting this mandate Rick Burchell agrees to maintain complete confidentiality with regards to our relationship and all information you obtain in the course of your duties.
6. Consents
By accepting this mandate, you agree to:
· the inclusion of your name in the Private Placement Memorandum (provided that you are satisfied with its contents); and
· act in a manner consistent with being a key party of the consortium securing the acquisition and development of Golden Beach International Resort.
We acknowledge that Rick Burchell does not accept responsibility or liability for the accuracy and completeness of the Private Placement Memorandum or any information provided to you in the course of your duties.
7. Lapse
This mandate will lapse in the event that:
·The execution of the joint‑venture agreement and payment for the private placement of shares in GBJV is not completed by 1st June 1999.
·Golden Wood may extend the mandate if there are investors who have already entered into negotiations before that date.
If you are agreeable to the above terms and conditions, kindly indicate your acceptance by initialling all pages and countersigning the space provided below.
Yours sincerely,
GOLDEN WOOD PTY LTD
(signed)
Hazreek Hussain Yusuf
Director
Rick Burchell advises that it accepts the mandate and that it is bound by the terms and conditions of this letter.
(signed)
Rick Burchell
Date: 19/4/99."
In his claim the plaintiff has sued not only Golden Wood on the basis of the agreement but also alleged breach of contract against the second, third and fourth defendants. The claim is made notwithstanding that the letter dated 8 April 1999 was signed by the third defendant only.
The first, second and third defendants make a number of allegations in support of their application for dismissal pursuant to Order 23.01. Firstly, that the mandate agreement was made between the first defendant and the plaintiff and that there was no agreement between the plaintiff and the second and third defendants. Secondly, that misrepresentations alleged by the plaintiff to be contained in the mandate agreement insofar as such representations were made can only be alleged against the first defendant as it was the sole party to the agreement with the plaintiff. Thirdly, it is alleged that no joint venture agreement was ever effected. Rather, it is said on behalf of the defendants that the only agreement entered into by the first defendant was a conditional sale of one half interest in the land to the individual known as Handbury. As a consequence, it is said by the defendants that no joint venture agreement has been entered into and, therefore, no obligation is owed by the defendants to the plaintiff in any event. Furthermore, it is submitted that there is no binding contract of sale of an interest in land and it follows, therefore, that there is no obligation upon the defendants in any event to pay moneys to the plaintiff as alleged. Fourthly, it is submitted that clause 7 of the mandate agreement provided that that agreement lapsed in the event that the execution of the joint venture agreement and payment for private placement of shares was not completed by 1 June 1999. The defendants submitted that the statement of claim (paragraph 8) pleads an alleged joint venture agreement entered into on 2 July 1999 that is after the date of 1 June 1999 expressly provided in the mandate agreement. Further, it is complained that the plaintiff does not allege any payment by the investor for the private placement of shares in the joint venture company. As there was no express extension of the mandate by the first defendant and as the plaintiff has not deposed to any act of extension of a mandate by that defendant it is said that the mandate agreement lapsed in any event and therefore there were no binding obligations upon the defendants as alleged by the plaintiff.
These are the matters relied upon in support of the application pursuant to Order 23.01. The starting point in an application under Order 23.01 is an acknowledgment of the very high burden that faces the defendants on the basis of the principles expressed by Dixon J in Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 92, also, Webster v Lampard (1993) 177 CLR 598, 603 and, more recently, by the Court of Appeal in Coles Myer Limited v Bowman (1996) 1 VR 446. With respect, the statement of the relevant principles set out by Charles JA (with whom Brooking and Callaway JJA concurred) in Coles Myer (at 549) conveniently states the law:
"In my view, the decision of the primary judge to dismiss the appeal was plainly correct. One does not need to cite authority for the propositions that: (a) an application to strike out a statement of claim on the grounds that it does not disclose a cause of action is to be refused unless the claim which is attacked is so clearly untenable that it cannot possibly succeed; and (b) the plaintiff's right to state his own case as he will, and to plead the facts which he contends will ground his claim, is not to be restricted unless it appears on the face of the pleading that the connection contended for between the facts alleged and the claims which are made is bound to fail."
The mandate is signed by the second defendant in his capacity as a director of the first defendant, Golden Wood. It is on this singular basis that the defendants argued that the agreement was confined to one between the plaintiff and the first defendant, Golden Wood. For the purposes of the present application I do not consider such assertion to be adequately made out. Firstly, before so deciding the court would need to hear evidence of the surrounding circumstances of the agreement and, in particular, the basis upon which the second defendant purported to sign the agreement. Secondly, there are references throughout the document where the plural personal pronoun "we" is used by the author of the document. It may be that such references were a reference to all of the defendants. So much cannot be determined at this point in time. As matters stand and applying the tests laid down by the authorities I consider that the defendants fail on the first ground of their application under Order 23.01, namely, that insofar as there was an agreement it was an agreement between the first defendant and the plaintiff and that there was no agreement as alleged between the plaintiff and the second and third defendants.
I turn to consider the status if any of the alleged joint venture agreement. The mandate agreement makes a number of references to a "joint venture agreement". For the reasons already stated it is a matter for issue at trial as to whether or not there was an agreement entered into between the plaintiff and any of the defendants. In my view it is a further matter for trial as to the terms and conditions of the agreement including whether or not the agreement was one that contemplated a "joint venture agreement". Applying the principles expressed by the authorities I cannot be satisfied that there was no joint venture agreement for the purposes of dismissing the proceeding pursuant to Order 23.01.
Next there is the matter of whether the mandate agreement has lapsed in any event as it was not completed by 1 June 1999. Essentially the submission is to the effect that time was of the essence of the agreement and that the relevant time having passed the agreement has lapsed. An examination of the mandate agreement reveals a number of references to "keeping the plaintiff informed" and target key dates", including a date, namely 1 April 1999 that had already passed at the time that the mandate agreement was signed. If a contract does not state a specific time for performance but fixes it only approximately, the prima facie inference is that performance "on time" is not an essential term of the contract (see D T R Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138CLR 423, 430-431; Rainbow Spray Sales Pty Ltd v Sanders (1964) NSWR 422; Tropical Traders Ltd v Goonan (1964) 111 CLR 41; also Cheshire and Fifoot's Law of Contract (5th) Aust. Ed. Para. 2110). On the face of the mandate agreement there is nothing that supports the assertion that time was of the essence. Ultimately it is a matter for determination at trial.
Furthermore, I note that the mandate agreement provided that the plaintiff was to receive a fee if and when the plaintiff successfully introduced an investor in the development. The basis upon which the equity of the investor is to be determined is not on its face for present purposes apparent. However, again it is ultimately a matter for determination at trial. I further note that the mandate agreement provides that it will lapse in the event that the execution of the joint venture in payment for the private placement of shares in the joint venture agreement is not completed by 1 June 1999. It was said by Mr Kaye QC who appeared with Ms Loughnann for the defendants that Golden Wood could extend the mandate if there were investors who had already entered into negotiations before that date. However before such a submission would be made out there needs to be determination at trial as to whether or not the agreement was entered into between the plaintiff and Golden Wood only or together with all four defendants. In this respect, in the statement of claim (paragraph 5) the plaintiff pleads that there was an agreement between he and the second, third and fourth defendants to the effect that Golden Wood would appoint the plaintiff. As a consequence, the plaintiff alleges that the agreement was made by all of the defendants. In this respect the plaintiff relies upon the use of the plural personal pronoun "we" throughout the mandate agreement and, further, the assertion that the third defendant, Hazreek Hussain Yusuf had authority to sign from both from his father, Dato Mohd Hussain Yusuf-Al-Haj the second defendant and his uncle, Hazizul Hussain Yusuf, the fourth defendant. The question of authority is a matter again to be determined at trial.
There were also submissions made by Mr Kaye on behalf of the defendants with respect to the contract of sale entered into by the defendants with Handbury. Mr Kaye submitted that the contract of sale did not constitute a joint venture agreement and in any event was subject to a condition precedent. For the purposes of the present application I cannot be satisfied as to the status of the contract of sale and whether or not it constituted a joint venture agreement. I further cannot be satisfied as to whether or not the contract of sale was executed after 1 June 1999 even if time was of the essence of the mandate agreement. Having had the opportunity to consider the contract of sale I have serious reservations for the purposes of an application under Order 23.01 that the plaintiff's claim should be dismissed without the opportunity for the determination of the proper construction of that agreement. It follows that I cannot be satisfied that the plaintiff's case is untenable hopeless in accordance with the principals expressed by the authorities.
It follows that the application brought under Order 23.01 by the defendants fails.
I turn to consider the application made in the alternative under Order 23.02.
The plaintiff pleads four causes of action, contract, misleading and deceptive conduct in breach of the Trade Practices Act and the Fair Trading Act, breach of trust and a claim brought under quantum meruit.
The Claim In Contract (Paragraph 5)
The defendants attack the pleading in contract on the basis that on its face the agreement cannot be between the plaintiff and the 2nd and 3rd defendants and, further, on the basis that paragraph 5 of the statement of claim pleads the actual appointment of the plaintiff by the second defendant. It is said, logically the agreement can only be between the plaintiff and the first defendant. For the reasons already stated these are matters to be determined at trial. However, the defendants further complain that paragraph 5 of the statement of claim does not contain sufficient particulars to establish the pleaded agreement with the individual defendants as parties. Having had the opportunity to consider the mandate agreement I accept this submission. If the mandate agreement as produced before me is to be relied upon as the foundation of the cause of action lying in contract then particulars, including particulars of any conversations and conduct relied upon to demonstrate the basis upon which it is asserted that the second, third and fourth defendants came to be parties to the mandate agreement should be alleged.
For the reasons already expressed I do not accept the attack made by the defendants upon paragraph 6 of the statement of claim. The defendants complain, further, that paragraph 7(a) of the statement of claim sets out clause 2 of the agreement but ignores clause 7 of that mandate agreement. There is further complaint that paragraph 8 of the statement of claim does not plead any facts constituting the "introduction" for the purposes of the alleged agreement between the plaintiff and the defendants. In my view such complaint can be satisfied by further and better particulars of paragraph 8 of the statement of claim. Insofar as paragraph 8 provides particulars it is submitted on behalf of the defendants that such particulars are inconsistent with clause 7 of the mandate agreement. I cannot be satisfied for the purposes of the present application that such is the case. Again it is a matter for determination at trial. As matters stand the particulars save for the observations I have made under paragraph 8 of the statement of claim are satisfactory. For the reasons already expressed I otherwise do not accept the complaints with respect to paragraph 7(a) of the statement of claim.
The defendants complained, also, about paragraph 7(b) of the statement of claim. In essence the complaint raises again the alleged flaw that there was no contract between the plaintiff and the second, third and fourth defendants as they were not contracting parties to the mandate agreement. For the reasons already stated I consider that such is a matter for determination at trial. Nevertheless the defendants complain that paragraph 7(b) of the statement of claim does not plead express obligations imposed on the second, third and fourth defendants as individual participants to the agreement (as distinct from the first defendant, Golden Wood). The defendants complain that as the pleading stands it involves a transposition of implied obligations of the first defendant on to the individual defendants, the second, third and fourth defendants. The defendants concede that it is arguable that the first defendant as part of its obligation to pay a fee to the plaintiff had an implied obligation to do all things necessary on its part for the carrying out of the contract (see Mac Kay v Dick (1881) 6 App Cas 251,263; Secured Income Real Estate (Aust) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596,607). Nevertheless the defendants complained that there is no pleading that transposes such implied obligation on to the individual defendants. I accept the complaint. Paragraph 7(b) should be struck out and re pleaded to allege the obligations said to be imposed pursuant to the mandate agreement upon the second, third and fourth defendants.
The defendants complain, also, that insofar as obligations are alleged by the plaintiff against the first defendant such obligations are in the nature of a guarantee. It is submitted that any such guarantee must be in writing pursuant to the requirements of s.126 of the Instruments Act 1958. On the face of the pleading I cannot accept that this is the case. There is nothing in the pleading in the nature of a guarantee. It follows that the submission in this regard by the defendants is not accepted.
The defendants complained, also, that insofar as particulars are provided in paragraph 7(b) of the statement of claim they do not support the terms pleaded. It is complained that the terms pleaded are not expressed in the mandate letter of 8 April 1999. It is further complained that such terms cannot be implied into that document as a matter of law as any such implication would be inconsistent with the terms of clause 2 of the mandate agreement (see B P Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52ALJR 20, 26; Secured Income Real Estate (Aust) Ltd v St Martins Investment Pty Ltd, Supra at 606). For the purposes of the present application I cannot be satisfied that the implication is inconsistent with the terms of clause 2. In my view such a matter is a matter for determination at trial on evidence. However for the reasons already stated I consider that the terms, if any, insofar as they are said to impose obligations on the second, third and fourth defendants should be revisited in clause 7(b) of the statement of claim.
The defendants complained, also, that paragraph 11 of the statement of claim is irrelevant. In the overall context of the pleading I cannot agree and in any event consider that it is a proper matter for determination at trial. The defendants complain, also, as to the form of paragraph 12(b) of the statement of claim. They complain that the plaintiff could not provide consideration for the agreement made on 19 April 1999 (as pleaded in paragraph 5) by acceding to a request made to it on 25 May 1999. The complaint is made that the statement of claim does not plead any obligation of the plaintiff to accede to the request. In my view this is a matter for evidence and turns on the proper construction of the mandate agreement. As the pleading stands I am satisfied it is sufficient.
Claim of misleading and deceptive conduct
The plaintiffs attacked paragraph 13 and 16 of the statement of claim with respect to the claim brought under the Trade Practices Act and the Fair Trading Act of misleading and deceptive conduct. In essence, the defendants complain that the pleading does not adequately or at all allege a representation as to a future matter. They submit that clause 2 of the mandate agreement does not contain any matter of a representational type. Whilst ultimately such may prove to be the case it is a matter in my view to be determined at trial. The defendants attack the particulars to paragraph 13 as relying solely on clause 2 of the mandate agreement. It is open to the defendants to seek further and better particulars of that matter. It follows that the complaint made by the defendants with respect to paragraphs 13 and 16 is not made out. The defendants attacked paragraphs 15 and 19 of the statement of claim wherein reliance and damages are pleaded. The defendants complained that the plaintiff must plead an appropriate causal link between the representation, his reliance on the representation and the damages pleaded. So much is correct as a matter of law and conceded by the plaintiff (see Marks v GIO Aust Holdings Ltd (1998) 73 ALJR 12). The defendants complain that no such causal or link is shown between the alleged representation in paragraph 13, the act of reliance in paragraph 15 and the damages consisting of "the value of the shares representing 10% of the equity in the joint venture" in paragraph 19. Mr Martin QC who appeared with Mr Whitten for the plaintiff submitted that the causal link is the failure to provide the 10% to the plaintiff to which he says he was entitled. Mr Martin conceded that such causal link was not specifically pleaded in paragraph s.13-17 of the statement of claim but would be part of the particulars provided under paragraph 17, namely, failing to consummate the agreement. In my view the particulars should be clarified in this respect. Accordingly it is appropriate that the plaintiff provide further particulars with respect to the causal link between the representation, the reliance and damages in paragraph s 13-17 of the statement of claim.
Trust
In paragraph 18 of the statement of claim the plaintiff alleges "in the premises" there was a trust. The defendants complain that such pleading is uninformative. There is also complaint that paragraph 18 is inconsistent with paragraph 9(d) of the statement of claim wherein it is pleaded that the defendants or one or other of them hold the relevant shares. Paragraph 18 pleads that the second to fourth defendants hold the shares on trust for the plaintiff. Mr Martin submitted that such matter could be the subject of particulars. I agree. Mr Martin stated that at this point the plaintiff does not know which one of the second, third and fourth defendants hold the shares in the first defendant. He submitted that by the time the proceeding reaches trial the plaintiff will know who held the shares in the first defendant. In my view the complaint against the pleading is not made out. It is a matter that is more properly the subject of a request for further and better particulars.
Quantum meruit claim
In paragraph 20 of the statement of claim the plaintiff alleges a quantum meruit. The defendants complain that the pleading does not identify how 10% of the value of stage one of the project constitutes a "fair and reasonable sum for work and labour done". In my view the complaint concerning the pleading is more properly a matter that falls within the province of a request for further and better particulars. It is a matter for further particulars as to how the relevant sum was calculated. Otherwise the plea in quantum meruit is an alternative plea in its traditional form is quite appropriate.
It follows that insofar as the defendants complain as to the pleading against them further and better particulars should be provided of paragraphs 5, 8, 13-17 and 18 in accordance with these reasons. The only matter in which the defendants have succeeded is with respect to the complaint concerning paragraph 7(b) of the statement of claim relating to the obligations, if any, imposed on the second, third and fourth defendants. I will order that paragraph 7(b) of the statement of claim be re‑pleaded. I will hear the parties as to the appropriate form of order.
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